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The Winter Democracy Bloomed

The desire for self government, jobs and bread has exploded across the Arab world. In over a dozen countries people are demonstrating for basic human rights. Perhaps the biggest looser in all of this is Islamic fundamentalism and al Qaeda, because the cries of the people are not for religious fundamentalism, but for the common human dignity that we all share. Demonstrators are putting their lives on the line for democracy.

Libya and Iraq are the latest to have demonstrations. Today the NYT focuses on American reaction to Egypt, Bahrain and Iran’s demonstrations

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Shadow Banks Rule

The Chamber of Commerce and Shadow Banks were caught with their hands in the cookie jar,  just as a congressional committee was to convene to amend rules on “casino capitalism.”  How ironic it is that over a 1000 bankers were issued jail terms in the Savings and Loans crisis decades ago and NONE have over the 2008 meltdown.  That’s how powerful the shadows and their lobbyists have become.

Andrew Ross Sorkin from NYT story and MIT prof Simon Johnson. – Derivatives Industry Report Collapses.

But that’s just for openers – The Chamber of Commerce & their shadow allies are not beyond investigating the families of critics and printing false accusations. If you support Wikileaks or speak out against The Chamber, BAC or those who want to run capitalism in the shadows this could happen to you. Glenn Greenwald reports.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Index	Percentage	Volume
Dow	-0.34%	down
NASDQ	-0.46%	up
S&P 500	-0.32%	up
Russell 2000	-0.71%	-

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Technicals Analysis

Investors411 record - 6 years of beating benchmark S&P 500

Nothing’s change much in overall outlook since Monday. Short term because yesterday’s moderate loss the McClellan Index is at a  more buyable level of  +6.97. But not yet near levels bulls would like. The bubble-icious stock market continues.

So today were going to focus on technical analysis. I call technical analysis looking at the pretty pictures/charts of  a stock’s price and volume and being able to make a forecast of future directions from those charts.

Stockcharts.com, the best free site on technical analysis on the web has a school/tutorial that will help you learn more about it.

Technical analysis works best when the markets, the sector and then the individual stock are in alignment or moving in the same direction.  The sum is greater than the parts, but in most cases it the individual stocks that matters most.

So here’s a list compiled by Paul R who has oodles of experience in technical analysis and uses a powerful HSGI program to augment his technical analysis skills.

Below is Your Stock List #3 and Paul’s recommendations. Most importantly use this a a learning  tool it technical analysis. He published it in the comments section of the blog a day ago, so its a bit dated and I’m sure he wants you to read his mea culpa. You can look up each chart pattern by inserting appropriate ticker symbol at Stockcharts.com. (link above) - His comments in Green and technical analysis below.

“In no way am I recommending a buy or sell of any of these stocks. These comments are for education only. (Understand?)

BIDU – getting extended, a hold and not a buy at the moment.

NFLX – getting extended, a hold and not a buy at the moment.

BEXP – went through a buy the dip correction in late January. Broken out, buy if it dips.

JNPR – leader in it’s group, broken out from a strong base, extended now, buy if it dips.

SKWS - Good chart, extended, buy the future dip.

KSU - Good chart, extended, buy the future dip.

DECK – Gone through a correction as has it’s group, buy the future dip.

PCLN - good chart, buy any dip

COH – Gone through a correction as has it’s group, buy the future dip

IMAX – basing, buy any dip if you want as long as if it’s above the 50.

SOHU – broken out, way too extended for my stomach. Not a good chart, it needs to tighten up.

IVN – basing, buy at any time at current chart position

ALV – basing along with it’s group at the moment. NOT buyable at the moment.

SAM – basing, sitting on the 50, buyable at any time

SPRD – Good chart, wee bit extended, wait until it touches the 17 dma again.

FFIV – NOT buyable at the moment, chart needs some serious work.

These observations are just that, observations. My observations are usually worthless. If you buy any of these dogs…blah blah blah. Did I mention these comments are for education only? Pay attention for crying out loud!”

An additional comment from Paul on how to Buy the Dip

Always watch the comments section for different ideas and comments on stocks, economics, trends and politics.

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Positions

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Look for Paul R‘s always enlightening remarks on stocks and sectors in the comments section of the blog. See ”POSITION“ section of blog (at top of page) for lists of potential stocks & ETF’s including “YOUR Stock List.” (YSL#4 is under construction.)

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Propaganda

Remember the US government staged propaganda fabrication the beginning of the Iraq war? An event that American media endlessly exploited. They toppled a statue of Saddam in Baghdad and everything was supposed to be a triumphant victory with garlands of flowers – instead we’ve had endless war.

Glenn Greenwald has another excellent piece on American Media’s complicity in propaganda. The government or ruling oligarchy itself doesn’t have to censor – the media will do it for them. Remember how opposition to the Iraq  was beaten down by cries of patriotism. Nothing’s changed.

Repealing Health Care

The non Partisan Congressional Budget Office has put the “savings of the Obama Health Care Bill at $143 billion through 2019.” Link to story here & here. The American Public is so propagandized over the imperfect health care bill by our media most do NOT realize it would save money. Remember the Tea Party and their uber wealthy backers shouted down reasonable debate using  the biggest LIE of the year – a government takeover of health care.

So if the Tea Party & Republicans are all about cutting the deficit why are they willing to add $143 billion to the deficit as their first pice of legislation?

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KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Index	Percentage	Volume
Dow	+0.27%	flat
NASDQ	+0.78%	up
S&P 500	+0.50%	up
Russell 2000	+1.18%	-

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Technicals, Fundamentals & Analysis

Investors411 record - 6 years of beating benchmark S&P 500

• Another heavy volume day. – Sure looks like some fresh money is coming back into market.
• Yesterday – A bear raid in commodities, especially  gold & silver (see below)
• Yesterday – ADP (independent company) comes in with a surprise outstanding gains for  jobs last month – +297,000
• Tech general AAPL on three day breakout run = bullish
• “schizophrenic.” pattern (from yesterday) swings back to bulls.
• Big new is still Friday’s monthly government jobs report. +140,000 expected, but many are expecting more because of ADP data.
• Bonds got crushed yesterday – This is bringing money out of bonds and hopefully into stocks.
• Weekly jobs data & retail sales key fundamentals for today.

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Reading The Tea Leaves

The ““schizophrenic.” pattern changed back to the bulls. The bulls case got far stronger because of volume and some surprising excellent jobs data.

A Bear Raid - Mea Culpa. I got caught in a bear trap yesterday. It happens. You learn from it and move on.

As most of you know I strongly believe in setting trailing stops to limit losses. One big big secret in investing is LIMIT YOUR LOSSES.

Two days ago I recognized warned and sold a gold position. Quote from yesterday “firmly believe that yesterday was nothing more than a bunch of traders trying to panic the gold market and drive the price down, so they can buy.”

The bears were coming, but I had missed out on selling my silver ETF that afternoon. I did have a trailing stop in place. The trouble was SLV opened 2% lower and plunged.  I got stuck with a -6% loss because my stop got blown up by both the overnight drop and the rapid decline at the open.

The gold/silver bears got some more amo from the surprising ADP jobs report which sent the dollar higher and that usually pushes gold/silver lower.

Aside - I strongly believe both gold and silver will be higher in the long term. Why –  global economic circumstances continue to deteriorate (Europe, housing, slow return to job growth, a stupid war etc.) , worldwide price inflation kicks in and/or  governments especially the Fed (QE2)  increase the money supply too rapidly.  Not all these have to occur – just some for gold/silver to rise.

Bottom Line – I got caught. So what lesson can be learned. to limit losses. I almost always use a 5 to 7% stop order on everything I buy.

• Buy the Dip – The original purchase was not on a dip and therefore the losses were larger.
• Perhaps more important check in on prices at the close of the day. If you check stocks once a day it should be near the close. If a sector or news has started momentum building then don’t wait for tomorrow because prices could open much lower.

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Positions

• UWM
• SLV - (Silver ETF) Got stopped out at open at 28.41 for -6% loss (see above)
• REMX -(ETF for Rare Earth Metals) Sold 1/2 at 26.12 for +6% gain

Not a great start in ETF trading for the year – +10% in UWM, +3% in REMx (1/2 sold), DGP -3%, & SLV -6% = +4% overall

YSL#3  had an outstanding day yesterday

Under consideration

UCO -(2x oil prices) Very erratic, waiting till correction it settles.

REMX (Rare Earth ETF) - Will consider more on a dip. Paul has posted an excellent piece on Rare Earth metals in comments section. Would consider adding to position if price falls to about 24.

EWZ (Brazil) & LBJ ( 3x Latin America – majority Brazil) Obviously the later is more risky because its leveraged 3X. Waiting for larger pull back on both.

UYG (ETF that does 2x Dow financials) XLF is the financial ETF. - The major shadow banks have the backing of the US government & the Fed. The recent BAC /Treasury/Fannie Freddie decision was the latest in a long line of NOT holding banks accountable and their accounting is non transparent. Remember these are the Shadows that are behind 8 million more Americans being unemployed, the dramatic fall of housing prices and a worldwide “great recession.” Broke out two days ago and pulled back yesterday. Both overbought at this time

DGP – Will buy back into this 2x gold ETF on dip.

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL#3)

WikiLeaks

CBS has published a can extensive compilation/summary of WikiLeaks documents that you can judge for yourself instead of listening to all the spin. Their title -” How WikiLeaks Enlightened US”

Transparency is essential to a vibrant Democracy.  Is the USA shifting toward a more dictatorial state like China and Russia that practice greater censorship of the press and persecution of those who oppose the government?

WikiLeaks has exposed no “Top Secrets” like Daniel Ellsberg did decades ago or the NYT did last decade. They have published “secrets” Here’s a Debate featuring Glenn Greenwald backing Jullian Assange and Fran Townsand in opposition

I do have have a bias because I’d love to see WikiLeaks information on the Shadow Banks and strongly believe  transparency is vital to freedom and democracy.

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KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

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Index	Percentage	Volume
Dow	+0.07%	flat
NASDQ	-0.38%	flat
S&P 500	-0.02%	flat
Russell 2000	-0.77%	-

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Technicals, Fundamentals & Analysis

Investors411 record – 6 years of beating benchmark S&P 500

• Markets were flat & volume abysmal AGAIN
• There are indications that at least some fresh money may be coming into stocks in early January. (see below)
• The dollar has fallen like a stone for last 3 days and broke its support level For US stocks = Bullish
• Big news at end of week is the unemployment report.
• Here’s Seeking Alpha’s Jeff Miller on this week – “Less Risk, More Reward“
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Reading The Tea Leaves

The first days of the month and Mondays are historically good days for US stock markets.

Friday we went over the possibility of an infusion of new money into the market in early January. All those giant shadow bank  and Wall Street executives have to put their bonus money somewhere and there is some evidence that it has started to trickle back into stocks (See Friday’s Investors411)

The dramatic reversal in Oil prices Friday caught at least me with my pants down.(see UCO below)  Oil prices more than making up the gains of the previous two sessions of losses is bullish for oil, commodities and stocks.

The  dollar significantly through a support level is a very bullish sign.

So when you put this together with the dollar breaking a signifiant support level Friday - At least for the short term -The Bulls are back.

The MO is at +15 and therEfore has lots o “wiggle room” before it reaches +or - 60. Room for a rally

Repeat- AAPL the world’s #1 tech stock is the canary in the coal mine. If the General rolls over watch out.

UUP the tracking ETF for the dollar is what to watch today. If it falls again – Bulls could Roar

Note Well - The dollar’s fall & corresponding rise in oil prices is something I should have noticed at 3:00 EST yesterday. Unfortunately, its called get a life, and I was otherwise occupied. If not I would have bought some long positions Friday PM.

HOPEFULLY, INVESTORS411 EDUCATES YOU SO THAT YOU CAN LEARN/UNDERSTAND WHY MARKETS SHOULD MOVE HIGHER OR LOWER

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Positions

• #1 UWM - (2x small cap stocks ETF) – 1/2 position
• #2 UWM
• SLV – (Silver ETF) Bought Wednesday at (see comments section of blog.)
• DGP -(2x gold ETF) Bought yesterday at 41.86

Under consideration

UCO -(2x oil prices) From Friday – “Oil prices got over extended and a short term reversal is to be expected”. Mea Culpa – Waited too long for dip as UCO rose 4+% yesterday and got stuck with a 1% loss by selling early Friday. (see Friday’s blog) Too high to by right now.

REMX (Rare Earth ETF) – Friday – Way too hot to buy now. Like a zillion investors who missed this initial jump we are waiting for a pullback. Lost -2.04% Friday. Would buy any similar drop today, but afraid its not going to happen.

EWZ (Brazil) & LBJ ( 3x Latin America – majority Brazil) Obviously the later is more risky because its leveraged 3X. On a role with three big up days in a row. Short term traders may risk buying a dip, but again afraid there will be no dip.

Note - The time has come to start rotating out of small cap stocks. They have had a great run. They will go up if the other major US indexes rally. However they probably won’t outperform as well as they did last year.  Investors will be looking at other leveraged ETF’s that have larger caps. So will sell some UWM today – hopefully into a rally.

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Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.” (YSL#3)

Pakistan

Many of you have raised public and private comments about America’s desire to have a colonial empire. (see comments section of blog) I certainly wish these countries had a functioning democratic system, but it can’t be forced on them and that force has proven counter productive and enormously costly for the USA. (see yesterday’s enlightening Tom Friedman’s editorial) LINK

One of you told me a deeply disturbing story of a Pakistani couple (two doctors) who have their green cards and just returned from visiting relatives in Pakistan. They said the situation there was rapidly deteriorating.  LINK

Pakistan should be our focus not Afghanistan .  As brought up before the fact that we spend 30 times the $ in Afghanistan we do in Pakistan is deeply troubling. If Obama goes ahead with the 3rd surge in Afghanistan that figure could grow to 40 or 50 to 1. We should be giving Pakistan’s fragile democracy more economic aid and listening to the views of their moderates instead of focusing on troop surges in Afghanistan.

Instead America is consumed by war propaganda. Glenn Greenwald writing for Salon makes an excellent point about the Universality of War Propaganda LINK

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	- 1.21%	up
NASDQ	-2.67%	up
S&P500	-2.40%	up
Russell2000	-3.51%	-

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals, Fundamentals & Analysis

Please Note – Long Term Outlook has changed from CAUTIOUSLY BULLISH to NEUTRAL

This is the first change to Long Term Outlook(downgrade) in many moons . This was done primarily on a technical basis. Both the NASDQ and the S&P 500 crashed through their major support levels (the 50 day moving average = blue line on charts at side of blog) We had an another major meltdown in above average increased volume again. This is the 3rd of 4th time within 5 weeks that volume has on a daily basis confirmed (rose significantly and was above average) a major downside price move (greater than 1%)

Longer term – volume has decreased as stocks have risen throughout the summer and fall. This is another technical sign of impending meltdown.

Markets are also not reacting positively to good news AAPL, GOOG,  AMZN , GS & others who beat expectations on TOP and Bottom line have rolled over and are trading down.  Hot stocks loosing ground on good news is the second canary in the coal mine dying.

Markets run on psychology more than anything else – especially in the short term.  Fundamentally , the situation is positive. The US lags most emerging markets, but even here more than a handful of companies now have top line growth.

The Dollar is the catalyst for this turn. Obviously it rose yesterday and this time the impact on stocks greater than the usual (@1% or less) that is approximately what stocks would have fallen with a+0.36% rise in the dollar. (see dollar analysis below)

When the Long Term Outlook is changed we often go back and forth for a while as stocks move above or below key support levels . Expect a rebound this AM.

Best Read of the Tea Leaves – I don’t expect a major roll over -20+%. If/when the dollar starts moving back down stocks should go higher.  However, some sort of correction (a 5 to 10% fall – we are already at 5%) is good for markets.  Anything that goes up too far too fast creates a bubble that bursts.

Also see dollar analysis below.

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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) .

The BDI is @ 30% off its high (early June) Before that it gained almost over + 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 )

The BDI lost a modest -27 points yesterday and closed at 2986. 2nd day of modest losses. A higher high price on its chart pattern has been confirmed The BDI has rallied almost 900 points since late September. =  Bullish for stocks & world trade right now

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The Dollar is currently the #1 forecasting tool . It would be a wild guess to predict he daily moves of the dollar, but longer term fundamentals are clearly negative – the trend of a falling dollar should continue.

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

Mantra – Dollar up = US stocks down & Dollar down = US stocks up

US dollar rose for for the 4th straight day +0.36% The dollar closed at $76.48 .  This is above the former support – now resistance level of $76.00 . Technically - Bullish for dollar & Bearish for stocks.

The next important resistance level for the dollar is the falling 50 day moving average (blue line on chart). This is at 76.83 this AM. It’s the line in the sand – Best read of the tea leaves is that it will hold. In fact, Investors411 will add to some positions  as we get close to this resistance level.

We 0.40 away from this resistance level. Mighty close.

Last year’s low was around $71,(March 08 ) so there is a long way to go before the major and very crucial support level is reached . The dollar does have a support level around $74.00( a high from about a year ago – see long term chart)

Positions

The  Positions Section (top of blog) to see all the latest buys and sells

Outside the USA in Emerging Markets (especially China, & Brazil) are much better in the long run - Our problem is one of timing. We can’t get a 5 to 10% dip to invest. Looks like we will get at least our 5 to 10% dip now.  Investors 411 should have much larger positions in emerging markets .

Look to add to EWZ (Brazil) and FXI (China) positions because of dip. If prices continue to fall  will nibble some more

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!